The alternative has GOT to be sponsors. And the sponsors won't sponsor an event unless there is money in it for them. Who would make money out of a cube competition? Toy manufacturers and toy distributors - those who profit from increased sales of their merchandise. For them it's cheap advertising and an opportunity to reach their target market.
The plus side to the cubing world is that there would be bigger competitions that would draw more and better cubers with which to compete. And the plus side for those elite few - like you, Erik - would be better prize money.
Think about it, Erik - you're a very talented and skilled cuber who has the potential to win world records. Watching you is inspiring to potential cubers, just like watching any sporting star play encourages a multitude of young people with sporting aspirations. Most won't go on to be superstars, but they play (and buy lots of sporting goods) because seeing the superstars play inspires their dreams. The sporting superstars are a veritable goldmine to sporting good manufacturers and distributors, and those businesses pay a LOT of money to create public exposure for the players. YOU are a veritable goldmine to toy manufacturers and toy distributors because people with your talent and skill inspire others to try, too.
Who profits from that? Well, right now I don't think you're getting a whole heck of a lot other than personal satisfaction. Harris pointed out in one post that sometimes - even if he wins - it costs him more to attend a competition than he makes with his winnings. Meanwhile, toy manufacturers and the toy distributors profit from your efforts, and they'd profit a whole lot more if they could get better exposure for your talents. So they should pay for the events that give public exposure to your skills, and they should make competing a lucrative enough endeavor for you to continue to advance your skills.
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